Materials supplier says it will not breach banking convenants in 2009 despite profit warning

Building materials firm SIG has warned profit in 2009 will be at the bottom end of expectations due to poor trading.

Current estimates range from £63m to £99m.

Despite the warning, the company said it was confident of not breaching its banking covenants this year.

It also said it was continuing to slash its cost base, with £8m of savings made in the last four weeks on top of a £62m cost cutting programme announced earlier this year.

The company said: “Across all businesses in the UK volumes remain subdued while pricing pressures and a move towards a more unfavourable product mix are holding back performance, with the UK interiors business particularly affected.

European markets have not achieved the usual level of seasonal improvement in the last four weeks."

It added: “The recent strength of sterling against the euro, while having a beneficial effect on the Sterling balance sheet will, if it continues, impact on the translation of Euro earnings.”